Can Netflix Stay On Top as Streaming Competition Grows?

The Walt Disney Company recently announced plans to launch their own streaming platform to exclusively house their historic array of film as well as their sports services through ESPN. This means that not only will they be removing their content from now-competition services like Netflix, but that they’ll be hoping to carve themselves a hefty slice of that increasingly profitable pie. This is a seismic shift for the company and signals a major evolution in the industry, which has never rushed to be ahead of the game at the best of times. Netflix pioneered that evolution, legitimizing original content not produced through traditional means, and helped to change the way we even consume films and TV in the first place. The binge-watching market is growing and Disney want in on it.

They’re not the only ones either: FX Networks announced their own upcoming streaming service, with their CEO John Landgraf cheekily the increasingly profitable market is “like getting shot in the face with money every day.” That’s one of the driving forces behind Disney’s decision to get into the now saturated streaming market. It’s an obvious consumer trend, driven by audiences choosing to “Netflix and chill” and view through digital options instead of the more profit-friendly pay-TV packages, where the money goes back to the source. It is believed that this is one of the reasons behind Disney’s current pivot, as this model has left to the company taking a hit on previously reliable sources of income like ESPN: If people can get the network cheaper elsewhere, why stick to what Disney wants them to? Soon, they won’t have a choice, which is great for Disney’s brand and investors.

All is not well in this market, of course, and the benefits are far from certain. As was heavily reported last month, Netflix, who still dominate the streaming market, are over $20bn in debt because they borrow heavily in order to pay for the exclusive content they make that entices new subscribers to the fold. Those subscriber numbers are increasing and revenue is solid, but for now the service is happy to dig that debt hole even deeper in order to build up a back-catalogue appealing enough to encourage those hold-outs to Netflix. It’s a risky and wildly costly strategy with no guarantee of success, at least in the short-term. This is clearly something on the mind of Disney’s investors, as the announcement led to shares closing on Wednesday with a 4% decrease.

There are major hurdles in place when it comes to getting into the streaming game. Even Disney, arguably the most powerful entertainment company on the planet and one that has garnered immense fan loyalty over the generations, needs to offer something unique to get subscribers to shell out an extra few dollars a month for this new service. Netflix and Amazon have original series and movies, and Filmstruck offers rare and classic movies along with the Criterion Collection. Netflix also benefit from the sheer quantity of content they offer, spanning genres and mediums and working to offer something for literally everyone. The growing competition could puncture that endgame for Netflix, especially if other studios or networks copy Disney and pull their content to start their own services.

Competition has its upsides for the consumers: Each service will have to work even harder to earn those prized few dollars a month. Which streamer will have access to the best movies? Which one’s making that must-see TV show everyone’s buzzing about? Who’s offering the best deal at the most efficient cost? There will always be avid viewers with deep pockets who sign up to every service, but that won’t be the average customer. Many subscribers will make the choice to cut one service in favour of the other if it doesn’t have the goods.

The oft-discussed problem of Peak TV has grown exponentially because of the increased popularity of streaming. As noted by John Landgraf last year, 2016 saw a whopping 455 scripted series on air. 141 series alone are airing or have been announced for streaming services. More choice is the name of the game but that makes standing out in an already crowded field even harder, no matter how prominent the platform. Even Netflix couldn’t make expensive gambles like The Get Down and Marco Polo pay off, so what does that mean for a smaller start-up?

The Get Down

For one streaming service, those big dreams quickly crumbled. SeeSo, a standalone streaming service launched by NBC at the beginning of 2016, was intended as a one-stop site for comedy geeks. On top of an assortment of classic comedy series and stand-up specials, the platform was the exclusive home of original shows like Take My Wife, a critically acclaimed rom-com by married comedians Cameron Esposito and Rhea Butcher, and the TV adaptation of the hit podcast My Brother, My Brother and Me. The idea was interesting – a niche platform never intended for massive audiences but carefully tailored to those select few who truly obsess over comedy – but it was essentially dead on arrival, and it was announced this week that NBC would be shutting down SeeSo. Their demographic may have been deliberately small, but even then they simply couldn’t keep up with the big players like Netflix and Amazon. Even their acclaimed original shows couldn’t bring in the numbers, not because they weren’t good but because paying $3.99 a month for a handful of shows versus the mammoth selection on other platforms wasn’t an effective deal. According to Reuters, 19% of US broadband households cancelled at least one of their streaming services in the past year.

SeeSo may be a very limited example of this Peak Streaming problem, but it embodies all of the pitfalls: Trouble garnering a sizeable audience, not enough content to entice their demographics, the perception of being an unnecessary luxury for a cash-strapped crowd. The idea of competition as a benefit for the customer ignores the simple reality of good old fashioned laziness – we want everything on one platform that we don’t have to keep switching over from, and we only want to pay once a month for the privilege. One behemoth of a corporation owning so many streaming rights wouldn’t be totally beneficial – doing so would mean that, say, Netflix could just charge whatever they wanted since there’s nobody else offering anything to compete with – but it’s probably the platonic ideal for many consumers.

Rhea Butcher and Cameron Esposite in SeeSo’s Take My Wife

It’s not out of the realm of possibility either. Disney don’t just own Disney movies: They own Marvel, Star Wars, the ABC TV Group (which encapsulates ABC, A+E, The Disney Channel and Hulu), Pixar, and ESPN. Bringing all that under one umbrella would be the ultimate business move, but is it sustainable? Not even Disney are immune from financial troubles or shifts in the market. With every network, studio and group speeding forward with the streaming model, racing towards market domination, this frenzy could very well exacerbate existing problems with the fragile ecosystem of streaming. It’s still a very new market, especially when compared to cable TV packages, fatigue could sit in quickly with consumers as well as creators caught in the middle to produce those tantalizing exclusives. Creating the ideal model that would please the largest possible demographic would cost tens of billions of dollars, something Netflix are borrowing through the nose to bring to life, and not every entertainment giant will be able to keep up.

This market is ever changing, so anything could happen between now and Disney getting their own services off the ground. Ultimately, the power is with the audiences, whose tastes and viewing preferences will dictate the trends every company will pivot towards. Out of the growing competition, Disney certainly has the leg up, but if you thought Peak TV was exhausting, Peak Streaming could provide a whole new level of confusion.